Scarce jobs force more Kenyans to try luck in self-employment

About six out of ten people had gone into self-employment as of 2019. [Courtesy]

By Macharia Kamau 

More Kenyans had opted to venture into self-employment before the coronavirus pandemic.

The move was not out of choice but due to a lack of options.

This is even as the proportion of people in wage employment in the country declined, according to a World Bank report - painting a gloomy picture of an economy whose industries are struggling to create jobs to absorb new entrants into the labour market and in some instances, shedding jobs.

About six out of ten people had gone into self-employment as of 2019, a significant jump from about four people who were self-employed in 2016. The proportion of people in wage employment has also reduced to 35 per cent in 2019 from 45 per cent in 2016 according to the report.

The World Bank report noted that the instances of self-employment are more among people with lower levels of education. The situation has been compounded by Covid-19, which resulted in job losses across sectors, with people resorting to opening up their businesses.

“Overall self-employment (both in and outside of the agriculture sector) increased from 39 per cent in 2005 to 43 per cent in 2015/16, and then 58 per cent by 2019.

Labour market

The share of self-employment has increased more among lower levels of education, suggesting a bifurcation of the labour market – with greater reliance on self-employment among the less educated,” said the World Bank in the just-published Kenya Economic Update.

Other than wage employment, also on the decline is unpaid family work, which has declined from 28 per cent of all employment in 2006 to eight per cent in 2016 and three per cent in 2019.

This is partly on account of the economy diversifying from agriculture, which has traditionally relied on unpaid family labour, with other economic sectors contributing to economic growth.

Agriculture, the largest employer, currently accounts for 47 per cent of people in employment compared to 59 per cent in 2006.

The share of self-employment has increased more among lower levels of education. [Courtesy]

The World Bank noted that even as Kenyans jumped into enterprise by starting their own businesses, there was a need to put in place mechanisms to ensure the survival of the new enterprises.

“For the self-employed, a major segment in Kenya, the new wave of programmes in addition to traditional business training and provision of finance is important to lift aspiration, encourage proactive behaviour, and support connecting to markets,” said the World Bank.

“While traditional interventions of financing and training on business practices show impacts, these are relatively small. Alternative interventions include behavioural interventions that encourage entrepreneurialism, build networks, improve management skills, and also support linking to markets.”

The economy has been struggling to create adequate jobs to retain the existing workforce as well as absorb new entrants.

The World Bank paints a worrying picture, noting that Kenya will be adding a million people into the labour market annually for the next decade.

This can be good for the economy if it is to produce enough quality jobs that can accelerate economic transformation but chaotic if the young people do not find jobs.